7 Stocks That Should Be on Every Investor’s Must-Buy List

Stocks to buy

Building a solid portfolio is key for any investor looking to grow their wealth. While chasing the latest hot stocks can be tempting, smart investors know that long-term buying and holding high-quality companies is a surer path to returns. Every portfolio should include a handful of stocks as core, long-term holdings that can continue compounding returns.

Even with the market hovering near all-time highs, the following seven stocks remain attractively valued for buy-and-hold investors. Could a market correction occur in the near term? It’s entirely possible, however, for the long-term investor that presents an opportunity to pick up shares of excellent companies at lower prices.

These are businesses I feel confident owning through market ups and downs. They have strong underlying fundamentals, competitive advantages that help hedge against disruption, and histories of leadership that instill trust. In short, they are as close to “surefire” as the stock market offers.

Microsoft (MSFT)

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Microsoft (NASDAQ:MSFT) has been executing extraordinarily well under CEO Satya Nadella’s leadership since 2014 as the newly crowned largest company by market capitalization.

By refocusing efforts on cloud, AI and subscription-based software, Nadella has transformed this once-struggling PC software giant into a trillion-dollar innovator spanning far beyond its Windows and Office origins.

Microsoft competes in almost every area of technology, from productivity software to cutting-edge AI to cloud infrastructure and more. This diversified revenue stream across software, hardware, cloud, AI, browsers, and operating systems provides stability and optionality.

While other tech giants remain concentrated, Microsoft’s “all-in” approach sets it up nicely for long-term out-performance.

Smart investments into AI leader OpenAI have captured incredible hype as well. As seen by the viral sensation of chatbot ChatGPT, AI promises to disrupt nearly every industry over the next decade.

With Azure backing these models and Mesh allowing them to interact with the physical world, Microsoft is an early leader in democratizing and monetizing this transformative technology.

I believe Microsoft has all the ingredients of a “forever stock.” Nadella and the team are innovating across too many critical technology segments not to continue compounding wealth. Calling this a “must-own” seems obvious given its broad reach.

Amazon (AMZN)

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Although Amazon (NASDAQ:MSFT) trades at a lofty valuation, its proven ability to penetrate and dominate new markets makes it a top “must-buy stock” in my book.

Founder Jeff Bezos’ customer obsession has powered this e-commerce site into a trillion-dollar empire spanning far beyond online retail.

While retail growth is maturing, Amazon Web Services cloud and advertising present the next frontiers. AWS sales grew over 13% to $24 billion in Q4 2023, proving its dominance versus competitors.

High-margin advertising also totaled $14.6 billion as brands flock to sponsored placements. With most advertisers now using Amazon’s Demand-Side Platform, a significant market share remains.

Beyond cloud and advertising, emerging areas like healthcare, brick-and-mortar retail, digital media, and AI chip design provide optionality. Amazon certainly doesn’t shy away from entering new markets, often successfully. Despite economic uncertainty, Q4 results beat expectations as net sales grew 14% and operating cash flow improved 82% year-over-year.

Trading at 40x forward earnings, this is no definitive bargain. However, proven innovation and 30-40%-plus annual earnings growth projections make this a premium I’m willing to pay. Cloud leadership, advertising gains, and Bezos’ relentless expansion into new markets should continue compounding shareholder value over any long-term horizon.

Alphabet (GOOG, GOOGL)

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Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) appears ready to run again in 2024—concerns over advertising spending cuts and AI competition with Microsoft chilled interest in the Google parent company.

However, with shares still 4% off 2021 highs, I see a compelling entry point for this AI and digital advertising leader.

Bard’s rocky debut rightfully concerned investors initially. But Google’s subsequent launch of more powerful language models like Gemini demonstrates its AI credentials versus OpenAI. The recent launch of the “Gemma” family of lightweight, scalable models also proves Google’s intent to democratize access through API availability. They won’t cede the AI race easily.

Beyond AI, Google’s core search and YouTube businesses remain dominant, valuable digital real estate. Though advertising spending slowdowns affected short-term results, digital marketing remains one of the highest ROI channels for brands. Google properties should continue attracting ad dollars as the #1 and #2 most visited sites globally.

In particular, I see massive monetization potential remaining on YouTube. Its recent ban on ad blockers and launch of higher-priced, premium tiers are just early efforts to unlock profits from this wildly popular digital video portal. Additional subscription bundles, 4K video streaming exclusives, and enhanced targeting capabilities can drive above-market growth for years.

Palo Alto Networks (PANW)

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Palo Alto Networks (NASDAQ:PANW) has been a cybersecurity leader, but its latest earnings disappointment shows even quality names face periodic headwinds. As shares tumbled nearly 30%, the company’s tempered guidance for next quarter suggests slowing sales growth lies ahead.

Specifically, PANW sees Q3 FY24 revenue of $1.95-1.98 billion and billings of $2.30-2.35 billion, missing expectations.

However, these headwinds bring a buying opportunity. Though guidance disappointed in the near term, Palo Alto still beat Q2 FY24 adjusted EPS estimates by 12.2% and revenue estimates by 0.19%. The company expects full-year revenue growth of 15% to 16% – hardly signs of a business in crisis.

Sometimes, long-term leaders face periods like this where noisy quarters divert attention from the bigger picture. PANW continues to innovate in next-generation security areas like extended detection and response, serving over 85,000 customers globally. Its subscription model also provides reliable revenue.

So, while I expect volatility until growth re-accelerates, periods of underperformance often serve up chances to buy quality at a discount. I remain confident in Palo Alto’s long-term trajectory.

Linde (LIN)

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As an industrial gas and engineering leader, Linde (NASDAQ:LIN) has built durable competitive advantages few rivals can match.

So, while a recent 7% year-over-year decline in Q3 sales to $8.2 billion initially seemed concerning, strategic execution still expanded net margins by 33% through pricing actions, lower costs, and long-term customer contracts.

Linde grew operating margins across all business segments this quarter, excluding cost pass-through items. Over the long run, this focus on profitability and strategic contract structures should compound shareholder wealth.

Granted, parts of the business, like natural gas, remain pressured by low commodity prices. But over decades, through smart M&A and capital allocation, Linde has continued consolidating its share in a defensive global industry. Trading at reasonable valuations, given its premium position, I expect reliable wealth compounding over full market cycles. Linde remains a long-term portfolio anchor.

FTAI Aviation (FTAI)

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Unlike the industrial giants above, FTAI Aviation (NASDAQ:FTAI) brings a more focused business model catering to global engine leasing and maintenance. But with shares up 300% over five years and 125% in the past year alone, this small-cap has rewarded shareholders a lot.

As demand for engine maintenance solutions has grown globally alongside expanding air travel, FTAI has captured share.

Quarterly revenue jumped 26% year-over-year to $291 million on broad-based gains, driving expectations for almost 65% full-year growth. EPS projections doubling from 2023-2025 show strong profit growth ahead.

Bulls will point toward high barriers to enter this specialty maintenance field alongside secular tailwinds from air travel’s resurgence. Following pandemic declines, carriers now face shortages of both planes and the engines needed to power growth. By providing comprehensive engine solutions that encompass sourcing, leasing, and repair, FTAI Aviation addresses a lucrative, underserved global niche.

I expect shareholder gains to continue compounding over the years by solving these complex challenges airlines face. FTAI deserves consideration as a high-upside growth candidate for aggressive investors.

Union Pacific (UNP)

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As freight volumes grow globally alongside economic expansion, Union Pacific’s (NYSE:UNP) rail infrastructure backbone deserves more investor attention. By sharing a duopoly with BNSF over key Western US transcontinental routes, UNP is uniquely positioned to transport goods efficiently across thousands of miles through America’s heartland.

UNP raised its dividend by 11.2% annually in the past five years and repurchased 3.5 million of its own stock in 2023. Operating ratios also improved year-over-year last quarter as volume gains and higher prices boosted profits.

UNP faces economic cyclicality concerns if a downturn reduces freight demand soon. However, trade flows over multi-year timeframes correlate with rising GDP as population and consumption grow. And infrastructure investments aimed at alleviating supply chain bottlenecks should provide added tailwinds.

So, while UNP rarely captures upside like high-flying tech stocks, patient investors focused on essential industries can lock in reliable returns. I expect more wealth compounding in the years ahead as Union Pacific keeps American commerce rolling.

On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.

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